Purpose Code P0104 - Receipts for intermediary or transit trade exports

Understand RBI FEMA regulations for receiving payments from exports of goods not covered by standard documents like GR/PP/SOFTEX/EC shipping bills. Check usage eligibility, documentation, compliance requirements, and how to apply this purpose code for inward remittance.

Purpose Code P0104 is used for receipts against export of goods under intermediary or transit trade, that is, third country exports that pass through India and are not covered by an Indian shipping bill. Goods originate in another country, transit through India, and go on to a buyer abroad, so no Indian export declaration covers them. Using P0104 ensures the inward remittance is recorded specifically as receipts for export of goods not covered by standard documentation, and not misclassified as other export proceeds, service income, or personal remittances.

This Purpose Code should be used only where the transaction fits its defined regulatory scope. Here's when you should and shouldn't use this code:

You should use this code when:

• Transit trade - Goods from a third country that pass through India on their way to an overseas buyer.
• Intermediary trade - An Indian intermediary receives payment for third country goods routed through India.
• Onward sale of transit goods - Receipts for goods held in India only in transit before onward shipment.
• Third country exports routed through India - Goods not covered by an Indian shipping bill.

Do not use this code when:

• Receiving payment for exports covered by standard GR/PP/SOFTEX/EC documents.
• Receiving payment for software exports.
• Receiving payment for goods sold under merchanting trade (use P0108).

RBI purpose codes are mandatory under FEMA to classify the nature of cross-border transactions entering or leaving India. They allow banks and regulators to accurately track foreign exchange flows and apply the correct regulatory, tax, and reporting treatment.

For individuals, businesses and institutions, correct purpose code usage:

• Ensures transactions are classified correctly under FEMA.
• Enables accurate reporting to the RBI and other regulators.
• Reduces delays caused by compliance checks or misclassification.
• Supports clean audit trails and tax reconciliation.

Bottom-line:

Using the correct purpose code helps ensure smooth processing, regulatory compliance, and faster credit of funds.

1. Select P0104 – Receipts against export of goods not covered by the GR/PP/SOFTEX/EC copy of shipping bill, when initiating the inward remittance.
2. Declare P0104 when submitting inward remittance details to your AD bank.
3. Provide the sale invoice, transit or transhipment documents and the transport document showing the goods passed through India.
4. The bank then verifies the transaction, issues FIRC if needed, and reports it to RBI through its regular FETERS returns.

Additional Notes:

• Mandatory for physical goods exports only.
• Covers goods that pass through India, not goods made or shipped from India.
• The payment you receive gets taxed as business income. You must also maintain alternative records like emails or goods tracking.

• Using a generic or incorrect purpose code instead of the exact RBI-prescribed purpose code can lead to misclassification of the transaction under FEMA and trigger additional compliance checks by the bank.
• Mismatch between purpose code, invoice, and remittance narration may place the transaction on hold until clarification is provided.
• Submitting unclear or incomplete supporting documents that do not clearly describe the nature of the transaction often result in delays, as banks rely on documentation to validate FEMA compliance.
• Missing mandatory PAN or incomplete KYC documentation can prevent banks from releasing funds until verification is completed.
• Using service-related purpose codes for non-service transactions like capital receipts, investments, gifts, or refunds can result in incorrect regulatory treatment and potential reporting issues.
• Assuming small or recurring transactions do not require accuracy and repeated misclassification can attract regulatory scrutiny over time.

Cross-border payments require accurate purpose code selection and complete compliance documentation. Xflow helps businesses and individuals receive international payments while staying aligned with RBI and FEMA requirements.

With Xflow, you can:

• Select the correct purpose code with clarity
• Organize and maintain supporting documents
• Reduce compliance back-and-forth with banks
• Support FEMA compliant inward remittances